The massive post-Katrina rebuilding effort has re-ignited an
ongoing complaint among entrepreneurs-small companies do not get a
fair share of federal contracts. Entrepreneur grilled
congresswoman Nydia Velázquez (D-NY) and congressman Rick
Renzi (R-AZ), our "Point/Counterpoint" team, about what
could be done to help entrepreneurs win more contracts.

Entrepreneur: Have the Bush Administration and the SBA
committed to fulfilling small-business set aside goals for
government contracts?

Rep. Renzi: Yes. It wasn't until President Bush laid
out the specifics of his small-business agenda in March 2002,
[which] included opening up more of the federal procurement process
to competitive bidding to allow more participation by small
business, [that we saw] results. The government achieved the
overall small-business prime goal of 23 percent.

Rep. Velázquez: Absolutely not. When you look at the
promises made by the Bush administration to increase contracting
opportunities for small firms, and then you see the decline in
contracts awarded to small businesses over the past five years, it
is clear that promises have not been kept.

One of the major obstacles small businesses face in accessing
the federal marketplace is contract bundling. The President
released a policy initiative in 2002 to break up bundled contracts.
However, reports released by the SBA's inspector general in May
2005 show that federal agencies have failed to follow through on
breaking up these contracts.

Have small businesses received a fair share of the
reconstruction contracts in the Gulf Coast?

Renzi: It did not start off well, but I am pleased to see
that the small-business share of reconstruction contracts in the
Gulf Coast is growing.

Velázquez: Small and minority-owned businesses in
the Gulf Coast region lost out on $2 billion in contracting
opportunities when recovery contracts were awarded to four large
corporations at $500 million each; they were no-bid contracts, so
small businesses were not able to get them.

Given the Gulf Coast problems, should SBA Head Hector Barreto
Resign?

Velázquez: When an agency charged with helping small
businesses fails to ensure small firms are included in the
rebuilding contracts and declines unprecedented amounts of disaster
loans in a time of need, there is clearly a problem. The agency
needs a leader committed to entrepreneurs.

Renzi: Hector Barreto is a good fit for the agency. He
grew up in a family-owned small business, owned a small business,
and has served in vari-ous small-business advocacy groups.

Let's look at it more broadly. What steps need to be
taken to address small-business contraction?

Renzi: There needs to be a constant education campaign
among government contracting officials and federal [agency leaders]
that procuring goods and services from small businesses will
provide the best value to the U.S. government. The biggest
stumbling block is a fear of the unknown: A contracting official
often would rather procure a good or service from a well-recognized
large company [than] deal with a small company.

Velázquez: To truly improve the situation, this
nation's federal contracting system needs to be entirely
revamped. There are myriad issues that need to be addressed to
improve the credibility and efficiency of the nation's
contracting system for small businesses. The problems that have
culminated with the Federal Procurement Data System and the lack of
accountability that exists in the current system must change. If we
want to ensure that small businesses receive their fair share of
opportunities, then there must be repercussions for those agencies
that fail to meet their small-business contracting goals.